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Major posts $7bn profit

Major posts $7bn profit

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Staff Reporter

Highlighting the ongoing strength of the Australian banking sector, one of Australia’s major lenders has recorded net profit after tax of $7 billion.

In announcing its financial results for 2011-2012, the Commonwealth Bank of Australia said it had increased its net profit after tax by 11 per cent on the year before.

“This is a good result given the uncertain environment in which we are operating. As expected, revenue growth was subdued reflecting ongoing caution from both our retail and corporate customers,” CBA’s group chief executive officer Ian Narev said.

“This translated into lower credit growth and greater pressure on market sensitive businesses. In addition, higher funding costs have put pressure on margins as competition for domestic deposits intensifies and wholesale funding continues to be expensive. Despite this environment, cash ROE remained healthy at 18.6 per cent. We are also particularly pleased that we have continued to invest for the long-term, while maintaining our momentum.

“We have worked hard at tailoring our cost base to this new lower growth environment. The significant investment we have made in technology over the last five years has helped us meet this challenge to improve our productivity. Two businesses which benefit most from our Core Banking Modernisation programme, Retail Banking Services and Business and Private Banking, have again reduced their respective cost to income ratios.

“While many of our customers are facing challenges, this is not translating into a deterioration of credit quality. However, given the uncertain outlook for both the global and domestic economies, we remain cautious with a strong balance sheet with high levels of capital, provisioning and liquidity.”

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Major posts $7bn profit
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